WRAPUP 5-U.S. Republicans push own 'fiscal cliff' plan; talks frozen

WASHINGTON, Dec 20 (Reuters) - Republicans in the U.S.
Congress pushed ahead on Thursday with a "fiscal cliff" plan
that stands no chance of becoming law as time runs short to
reach a deal with President Barack Obama to avert a
Washington-induced economic recession.

House of Representatives Speaker John Boehner's "Plan B" to
limit income-tax increases to the wealthiest sliver of the
population appeared likely to pass the House on Thursday evening
after it narrowly cleared a procedural hurdle in the afternoon.

However, Obama has vowed to veto the plan, and Senate
Majority Leader Harry Reid said he will not bring it up for a
vote in the Democratic-controlled chamber. White House spokesman
Jay Carney called it a "multi-day exercise in futility."

Still, passage of Plan B could give Boehner the political
cover he needs to strike a deal that would break with decades of
Republican anti-tax orthodoxy.

"Time's running short. I'm going to do everything I can to
protect as many Americans from an increase in taxes as I can,"
Boehner told a news conference.

Though it does not raise taxes on as many affluent Americans
as Obama wants, the bill would put Republicans on record as
supporting a tax increase on those who earn more than $1 million
per year - a position the party opposed only weeks ago.

That could make it easier eventually to split the difference
with Obama, who wants to lower the threshold to households that
earn more than $400,000 annually. Obama also faces resistance on
his left flank from liberals who oppose cuts to popular benefit
programs, which Republicans say must be part of any deal.

Obama and Boehner will need to engage in more political
theater to get lawmakers in both parties to sign on to the
painful concessions that will have to be part of any deal to
avert the cliff and rein in the national debt, analysts say.

"They are now in the mode where they have to demonstrate how
hard they're trying to get everything they can," said Joe
Minarik, a former Democratic budget official now with the
Committee For Economic Development, a centrist think tank.

Even as he pressured Obama and the Democratic Senate to
approve his plan, Boehner indicated that he was not willing to
walk away from the bargaining table.

"The country faces challenges, and the president and I, in
our respective roles, have a responsibility to work together to
get them a result," Boehner said.

TIME RUNNING OUT

Obama and Boehner aim to reach a deal before the end of the
year, when taxes will automatically rise for nearly all
Americans and the government will have to scale back spending on
domestic and military programs. The $600 billion hit to the
economy could push the U.S. economy into recession, economists
say.

Investors so far have assumed the two sides will reach a
deal, but concerns over the fiscal cliff have weighed on markets
in recent weeks. The S&P 500 index of U.S. stocks was up
0.4 percent in Thursday trading, despite a round of strong data
on economic growth and housing.

"The closer we get to the end of the year without a deal,
the more optimism is going to evaporate," said Todd
Schoenberger, managing partner at LandColt Capital in New York.

Shares crept up after Boehner said he was prepared to work
with Obama to prevent the fiscal cliff from kicking in.

Lawmakers are eager to wrap up their work and return home
for the Christmas holiday, but congressional leaders kept the
door open for last-minute action.

The Senate was expected to leave town on Thursday or Friday,
but Reid said it could return next week to vote on any deal.

Boehner indicated the House would stay in session after
Thursday's vote, scheduled for 7:45 p.m. EST (0045 GMT on
Friday).

Several influential conservative groups have condemned Plan
B, and some Republicans are expected to vote against it. But
passage appeared likely after the House narrowly voted by 219 to
197 to bring the bill to the floor for debate.

The U.S. Chamber of Commerce, an influential business group
that has often tangled with the Obama administration, offered
grudging support.

"We are not comfortable allowing tax increases on anyone in
this environment. However, we understand that, at times,
politics requires compromise," the Chamber's top lobbyist, Bruce
Josten, wrote in a letter to lawmakers.

To placate conservatives, Boehner also scheduled a vote on
legislation that would shift $55 billion in scheduled defense
cuts to cuts in food and health benefits for the poor and other
domestic programs.

That measure also would roll back some of the Dodd-Frank
financial regulation reforms of 2010. It is not expected to
become law.